Notes for class 3 Chapter 05

Notes for class 3 Chapter 05 - Accounting 2610 Chapter 5 -...

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Accounting 2610 – Chapter 5 - Class 3 1 1 Chapter 5 Communication of Financial statements Accounting 2610 Class 3 Tzachi Zach 1/22/2008 2 Announcements ± I assume that you are experts with Blackboard. ± Quiz 1 next Tuesday. ± Will cover chapters 1,5 and 2. ± Practice quiz will be posted on Blackboard. ± Special accommodations?? ± Students who are late for the quiz ± Enter class quietly ± I will give you the quiz immediately or wait 5 minutes after the rest of the students began their quiz. ± Next class will cover chapter 2 ± Second part of the course begins ± Pace will be fast ± Make an effort to read the chapter 3 Last class refresher ± Four basic statements ± And the relations between them ± A = L + SE ± The need for rules and effective communications ± Who makes the rules?
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Accounting 2610 – Chapter 5 - Class 3 2 4 Plan for today ± Accounting information communication ± Who ± What ± How ± To whom ± Practice problems 5 Players in the Accounting Communication Process An unqualified opinion states that the financial statements are fair presentations in all material respects in conformity with GAAP. Independent Auditors Verification Partners, Managers, Staff Guided by GAAS Management Preparation CEO, CFO, Accounting Staff Guided by GAAP Information Intermediaries Analysis and Advice Financial analysis, Information services Independent Auditors Verification Partners, Managers, Staff Guided by GAAS Management Preparation CEO, CFO, Accounting Staff Guided by GAAP Players in the Accounting Communication Process Financial analysts make predictions concerning companies’ future earnings and stock prices.
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Accounting 2610 – Chapter 5 - Class 3 3 Information Intermediaries Analysis and Advice Financial analysis, Information services Government Regulators Verification SEC Guided by SEC regs. Users Analysis and Decision Investors, Lenders, etc. Independent Auditors Verification Partners, Managers, Staff Guided by GAAS Management Preparation CFO, CEO, Accounting Staff Guided by GAAP Players in the Accounting Communication Process Public companies only 8 Managers financial reporting responsibilities ± Managers (CEO, CFO and accounting staff) ± hold the primary responsibility for the information in financial statements ± To ensure accuracy ± Maintain a system of controls ± Independent auditors ± Audit committee ± Example: Lucent 2001 ± Sections 302 and 906 of Sarbanes-Oxley act ± The principal officers required to certify quarterly and annual report with the SEC. ± SEC order from June 27, 2002 requiring a sworn statement from certain companies 9 Managers financial reporting responsibilities
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Accounting 2610 – Chapter 5 - Class 3 4 10 Independent Auditors ± Auditors express an opinion as to the fairness of the financial statement presentation.
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Notes for class 3 Chapter 05 - Accounting 2610 Chapter 5 -...

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